When Peja Stojakovic reached a verbal agreement to sign with the New Orleans/Oklahoma City Hornets on the first day of free agency earlier this month, it appeared the Pacers would get nothing back for Stojakovic, the longtime Larry Bird favorite they acquired from Sacramento in January's Artest trade.

By chipping in an undisclosed cash payment, Indiana convinced the Hornets to participate in a sign-and-trade for Stojakovic instead of just signing him away outright.

So the Pacers sent Stojakovic and the cash to New Orleans/Oklahoma City for the rights to 1998 second-round pick Andy Betts, who likely will never play for Indiana, thus creating a $7.5 million trade exception that gives Indiana a new tool with which to complete a sign-and-trade with Atlanta for the player they most covet to replace Stojakovic: Al Harrington.

Potentially.

"It can be used in a lot of different ways, so we're very appreciative to have it," said Donnie Walsh, Indiana's CEO and mentor to Bird in the Pacers' front office. "You can become the focal point for a lot of trades with an exception [of this size]."

Walsh made it clear that this exception by no means guarantees the capture of Harrington, knowing quite well that Indiana still must strike a sign-and-trade agreement with the Hawks to get him ... and that trade exceptions come with significant limitations.

This exception, for starters, is useful in the Harrington chase only if Harrington agrees to a first-year salary in the $7.5 million range. That's because a trade exception doesn't equal salary-cap space, can only be used in trades and can't be treated as an asset to be packaged with another current Pacer to create a bigger opening than $7.5 million.

Harrington is still holding out for a higher starting salary than that, according to NBA front-office sources, and the Pacers know that the Hawks have been swapping sign-and-trade proposals for days with the Golden State Warriors, as well.

However...

Simply having the trade exception, which remains valid for one calendar year, creates trade opportunities for Indiana that didn't exist as recently as Tuesday. One hypothetical scenario that would land Harrington back with the Pacers is Indiana sending a veteran to Atlanta in exchange for a newly signed Harrington, with the trade exception enabling the Pacers to acquire Harrington's higher salary.

Pacers players who fall under the banner of available, according to NBA front-office sources, are big man Jeff Foster (who makes $5.5 million next season) and guards Anthony Johnson ($2.6 million) and Sarunas Jasikevicius ($4 million).

Harrington himself has repeatedly described Indiana and Golden State as his top two free-agent destinations. Yet unless Harrington was willing to sign for the $5.2 million mid-level exception -- and he's obviously not -- a sign-and-trade is required to get him to either team, since neither has cap space to offer him.

The sign-and-trade can take the form of a multi-team deal, with Milwaukee ranking as the most likely third trade partner because of Atlanta's interest in Bucks center Jamaal Magloire. Yet it remains to be seen which of Harrington's two primary suitors, Indiana or Golden State, is best positioned to complete the transaction.

The Pacers, especially now that they're armed with the exception, appear more capable of constructing trade scenarios that put the least long-term financial strain on any other team involved.

The Warriors' primary asset to offer in a Harrington exchange is power forward Troy Murphy, who ranks as one of the league's few consistent double-double men -- having averaged 13.6 points and 10.3 rebounds in his past three full seasons -- but who also carries a contract with five years and $51 million to run.

The Hornets, according to NBA front-office sources, would have been reluctant to participate in a sign-and-trade for Stojakovic had they been signing him away from another Western Conference team. But helping the Pacers create a trade exception, if Indiana indeed lands Harrington, could come with the bonus of hurting the Warriors, who, like New Orleans/Oklahoma City, are trying to make the leap into the West's top eight.

Harrington told ESPN.com earlier this week that the New York Knicks and Los Angeles Lakers have also tried to present Atlanta with workable sign-and-trade offers. But Harrington says he expects to end up with the Pacers or Warriors.

Indiana drafted Harrington out of high school in 1998 and wants to reunite him with close friend Jermaine O'Neal and second-year swingman Danny Granger on a new-look, highly athletic front line. Golden State, though, is just as interested, with another former teammate (Warriors vice president Chris Mullin) and two current Warriors (Baron Davis and Jason Richardson) lobbying Harrington hard on a switch to a new conference.

"Obviously, Indiana, I'm more comfortable there because I've been there, I've been in the East," said Harrington, whose parents still live in Indianapolis. "But Golden State, I like the team they've got. I like it a lot.

"Going into free agency, obviously you think, I'm going to be at the bottom of the screen [on ESPN's Bottom Line ticker] like Ben Wallace and the rest of the guys. But everyone's telling me to be patient, so that's what I'm trying to do."

If the Hawks decide they like Indiana's trade offer best -- Foster and a future draft pick, for example -- Harrington might have no better option than a deal starting in that $7.5 million range, which would still be worth nearly $57 million over six seasons.

Yet all is not lost for Indiana if Harrington goes elsewhere and the exception goes unused this offseason. The Pacers would still have use of the exception through July 11, 2007, setting them up to perhaps pluck an extra asset or two as part of a multi-team deal or by trading draft picks and/or cash for a quality veteran in a standard two-team deal.

Artest, incidentally, told ESPN.com last week that the Pacers could survive Stojakovic's departure no matter what moves they made in response.

"They didn't get stuck without nothing," Artest said. "Danny Granger is a really good player. Really good. He will fill the void. Definitely."